Pertamina wants 90 percent stake in CPP block

State oil and gas company Pertamina said it wanted a 90 percent stake in the joint venture with the Riau provincial administration to develop the Coastal Plains Pekanbaru (CPP) oil block in Riau.

"Pertamina wants a 90 percent stake. This is due to technical reasons and considerations about investment viability. If Pertamina's stake is cut down, we shall not be able to work," Pertamina's director of exploration and production Gatot K. Wiroyudo told reporters on Thursday. Pertamina has agreed to set up a joint venture with Riau to develop the CPP block after the current contract held by American oil and gas company PT Caltex Pacific Indonesia on the block expires next August.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government has decided to give Pertamina "a majority stake" in the joint venture but he has thus far refused to provide details on the share figures.

But, according to Gatot, the government has decided to give Riau a mere 20 percent stake.

Analysts believe Gatot's statement will draw angry reactions from the Riau provincial administration and council, which have thus far insisted that the province should have a 70 percent share in the joint venture.

Purnomo's statement late last week indicating the government's plan to give a majority stake to Pertamina has already drawn strong protests from the provincial administration and council.

Under the production sharing agreement system, the government will take 85 percent of the CPP block's oil output, leaving the remaining 15 percent to the developer of the block. Thus, under the system, Pertamina and Riau will share the 15 percent oil output.

Aside from a portion of the 15 percent oil output, Riau is also entitled to receive 15 percent of the government's 85 percent oil take under the Central and Regional Government Revenue Share Law No. 25/1999, which will come into force next year. (Godang)